What Effect Are M&As Having On The Channel?

By Arlin Sorensen, O and Founder of the Heartland Companies which includes HTG Peer Groups

M&A is definitely the buzz in the channel today. Not only on the IT managed services provider (MSP)/solutions provider front, but also in the vendor/cloud provider area as well. Things are changing rapidly as companies acquire, merge, partner, or find any number of ways to combine forces. The landscape changes daily, and the discussion is about where the next deal will come from. 

There are brokers by the dozens out looking for companies that want to acquire or be acquired. For some, this has been a great time to take some cash and risk off the table. They’ve received great multiples of EBITDA and are happy with their return. For others, they have discovered that the hard work they have put into their company the last 20 to 30 years does not translate into value for someone else, and the retirement nest egg they have been counting on is much smaller than hoped for.

The M&A activity is not unique to the IT industry at all. Consolidation is part of the way businesses and industries mature, and the IT industry is moving from a relative new industry to a more seasoned and mature one. Part of that transition is for companies to consolidate with other companies to expand their market position. Part of it is the rollup of like businesses to create a large industry player that can cover a region or the entire nation. Part of it is the strong buying the weak to gain market expansion. It is just part of what happens as an industry matures and the force of business takes over.

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